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Beebe: Proceeds from severance tax hike shouldn't go to general revenue Saturday, Mar 8, 2008 By John Lyon Arkansas News Bureau LITTLE ROCK - Gov. Mike Beebe said Friday he would not consider putting revenue from a proposed severance tax increase into the state's general revenue. Beebe has said he plans to propose an initiated act to raise the state's severance tax on natural gas - currently one of the lowest in the nation - and spend revenue from the tax increase on state highways. A caller to his monthly call-in program on the Arkansas Radio Network asked him Friday why the money could not go to general revenue instead of being dedicated to a single purpose. "Without this for highways, there is no real possibility of a road program in Arkansas," Beebe said. "That's because we can't raise the gas tax. I won't raise the gas tax. Gasoline's too high now. It's killing our people." Beebe said the gasoline tax is charged at a per-gallon rate, so as cars become more fuel-efficient, revenue from the tax declines. Raising the severance tax not only would create a new revenue stream but also would bring Arkansas in line with Texas and Oklahoma, the governor said. Oklahoma's severance tax is 7 percent of the market value of the natural gas extracted, and Texas' is 7.5 percent. Arkansas charges three-tenths of one cent per 1,000 cubic feet of gas, regardless of market value. Beebe has said Arkansas' rate should be comparable to those of Texas and Oklahoma but has not said what rate he will propose. One caller asked if raising the severance tax would allow the state to lower fuel taxes. Beebe said it would not, because the need for highway money is too great. State highway officials have estimated the state's overall highway needs at $19 billion over the next decade. "Even with a severance tax on (natural) gas that would provide some significant additional input in road construction or maintenance or repair, it still won't even come close to meeting that need over that length of time. It'll help, but it won't come close to it," Beebe said. Another caller noted that natural gas companies currently exploring the Fayetteville Shale play are investing heavily in Arkansas and asked why Beebe would want to "stab them in the back." "We do need to be thankful for and support a new industry that's employing a lot of people and creating a lot of jobs, and frankly creating a lot of revenue for the state in other fashions, such as with income tax," Beebe said. "So you are absolutely right, and that's been my approach all along. That's why I have not favored somebody else's approach that didn't take those things into consideration." Beebe apparently was referring to former gas company executive Sheffield Nelson, who has proposed his own initiated act to raise the severance tax. Nelson's proposal would raise the tax to 7 percent of market value with no exemptions. Beebe previously said he wanted to raise the tax through legislation and wanted to reach an agreement with gas companies on an increase - combined with tax incentives comparable to what Texas and Oklahoma offer - that the industry could support. He said Monday he had shifted his focus to proposing an initiated act after talks with gas companies broke down. "We don't want to kill the goose that laid the golden egg. Having said that, however, the people of Arkansas are entitled to a fair reimbursement for a finite resource that's being taken," Beebe said Friday. Beebe also said raising the severance tax would not cause gas bills to rise. Most of the natural gas Arkansans buy comes from other states, he said. "It's almost like, you can't tell how much water is going by that bridge out there in Little Rock in the Arkansas River that came from a stream in Arkansas and how much water came from a stream in Oklahoma or Kansas upriver. It all gets commingled, just like the gas all gets commingled," he said. |
